4. Drugstores
A Growth and Accelerating History
Sales Performance in the Brazilian Pharmacy Retail Sector from 1996-2011 (R$ Billion)
43.00
36.00
30.20
26.40
23.60
21.50
19.20
17.20
14.80
13.10
11.20 11.60
9.40 10.30
8.30
7.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1997 – 2000 2001 - 2002 2003 – 2005 2006 – 2007 2008 – 2011
1997: Asian Crisis 2002: Crisis pre-Lula 2003-04: First years of 2006: Second Lula 2008: Subprime
1998: Russian Crisis election Lula´s election election Crisis
1999: Real Depreciation 2001: Argentine Default 2004: Mensalão scandal 2010: Greece Debt
2000: Internet Bubble burst Crisis
Drivers Macro Drivers Micro Timing
Fragmented Formalization and
Income Growth Population Aging Generics Drugs Regional Brands
Market Consolidation
Source: IBGE. Farmácia Popular. Health. OMS IMS. Brazil Banco Central do Brasil 4
5. Brazil Pharma: Leadership Position
Brazil Pharma consolidates its leadership position in four of the five regions of Brazil. Becoming the largest retail
pharmacy (ex-Southeast)
1
Number of Stores
North Northeast Mid-west Southeast South
1o
2o
(2)
3o n/a
(2) (2) (2) (2) (2)
4o n/a n/a n/a n/a n/a
Source: Brazil Pharma, Abrafarma 5
Note: (1) Ranking by number of owned stores as of Dezember 31, 2011 considering the four largest Drugstore chains in Brazil; (2) n/a: Other chains do not have operations in the region
6. Brazil Pharma: Footprint
Largest Drugstore Chain in the Brazilian Retail: Ready to Growth and Consolidating
232 ¹ Owned86
stores
1
114 ² Owned stores
103 20 1 10
118 Owned stores
15 75
201 Owned stores
7
114
10 352 Franchises
89
REGIONS 19
Owned stores Footprint
North 104
Northest 242
Midwest 118
8
Southeast
193
South 201 1.017 stores
665 owned stores
352 Franchises
05³ Distribution centers
1) Includes 69 stores from Guararapes’ platform ; 2) Includes 11 stores acquired from Estrela Galdino on April 2012 and added to Sant’Ana’s store count in June 30, 2012.Therefore they generated no revenues in 6
2Q12 ; 3) Sant’Ana’s Distribution Center has suffered a fire on December 2011. A new distribution center will be inaugurated in the second half of 2012.
7. Brazil Pharma: Market Penetration
Growth already contracted
Large Growth Capacity Maturation of Owned Stores
Organic Growth (# owned stores) (2Q12)
Market Growth Diversified Sales Mix
(CAGR07’-11’) (2Q12)
Brazil Pharma Abrafarma
HPC Branded Generics
7
8. Brazil Pharma: Market Consolidation
Strategic Growth based on M&A and Organic Growth
IPO @ Platform Actual Platform
(1Q11) (2Q12)
663 Points of sale 1,017 Points of sale
302 Owned Stores 665 Owned stores
361 Franchises 352 Franchises
60 Owned stores
232 Owned stores
1
114 Owned stores
118 Owned stores
89 Owned stores
361 Franchises
352 Franchises
201 Owned stores
153 Owned stores
Owned stores
Franchises
Distribution Center
(1) Sant’Ana’s Distribution Center suffered a fire on December 2011. A new distribution center will be inaugurated in the second half of 2012 ; (2) Includes 11 stores acquired from Estrela
8
Galdino on April 2012 and added to Sant’Ana’s store count in June 30, 2012.Therefore they generated no revenues in 2Q12.
10. Brazil Pharma: Our History
Great regional companies into a Excellent National Company
186 years of
History IPO
1945 1965 1975 1994 1994 1995 2009 2011 2012 2013E 2014E 2015E 2016E
10
11. Brazil Pharma: Your first option!
Distinct Companies
Holding
Corporate
Unique Company
Administrative
Commercial Operations
(SSC)
#1 for Suppliers #1 for Customers #1 for Talents
11
12. Brazil Pharma: Commercial Structure
Procurement / Trade
Marketing/ Corporate
• Orders;
• Negotiation;
• Supplier Service; Sell Out
• Controls.
Procurement /
Trade Marketing/
Corporate
Sell Out Sell In Sell Out
Sell Out Team /
Execution
• Trade Marketing;
Sell Out • Stores visitation;
• Generation of local
demand;
• Campaings.
12
14. “More with Less”
Incresing operational efficiency and stores productivity
BRPH @ IPO (1Q11) BRPH 2Q12
# of store employees
per store
22,6 20,4 -10%
# of administrative + distribution
center employees per store
3,8 3,5 -8%
EBITDA (ex-G&A) per employee1
(R$ thousand) 3,7 6,4 +74%
EBITDA per employee2
1,5 3,0
(R$ thousand) +98%
Sales per store level employee
34,4 54,9
(R$ thousand) +60%
# of stores opened in the period 10 22
Notes: (1) Considers total stores and distribution centers employees. 14
(2) Considers total employees (store, distribution centers and administrative).
16. Differentiation
Portfolio differentiation by products and categories allows Brazil Pharma to capture higher margins over sales
Unique Positioning Sales Mix
Product sales mix: 2Q12 (% of Gross Revenue)
Right mix
Brazil Pharma Abrafarma
Differentiated service
Exclusive brands 26.3%
36.5%
63.5%
Loyalty program 73.7%
New products
Medicine Non-Medicine
Virtuous Purchase Cycle… Generics Potential
Medicine sales mix: 2Q12 (% of Gross Revenue)
Brazil Pharma Abrafarma
Customers
Product
15.3%
Benefits 26.9%
Attendance
Convinience 73.1% 84.7%
Price
Generics Branded
Source: Brazil Pharma e Abrafarma 16
17. Experienced Management
Management # Years # Years
Experience
Pharma Market Financial Industry
André Sá
3 12
CEO
Sara Rezende
2 6 Entrepreneurship
CFO
Experience
Renato Lobo
n/a 18
Investor Relations
Carlos Dutra
Commercial Director 20 n/a
Flavio Sanchez
Shared Services Officer 1 16
Gilberto Portela
Head of Institutional Relations 30 n/a Pharmacy Market
Álvaro Silveira Jr. Experience
22 n/a
Head of Midwest Operations
Wilson José Lopes
Head of South Operations 25 n/a
Raul Aguilera
25 n/a
Head of North and Northeast Operations
Wesley Barbosa
10 n/a
Head of Bahia Operations
Board of Directors
Marcelo Kalim 15 Financial
Board Member n/a
Expertise
Carlos Fonseca 14
Board Member n/a
Álvaro Silveira n/a
36 Market
Board Member
Expertise
Roberto Martins
20 22
Board Member
José Luiz Depiere
Board Member 14 n/a Manufacturing
Artur Grynbaum
Expertise
Independent Board Member
25 n/a
17
18. Performance of BPHA3 versus IBOV
Since its IPO, Brazil Pharma stock outperformed the Ibovespa by 48.2%.
Indexed Stock Price (Base 100)
06/27/2011 to 09/05/2012
11/03/2011: 11/28/2011: 12/26/2011: 02/13/2012: 04/16/2012:
06/21/2012:
Big Ben Estrela Stock Split Sant’ana Beauty’In
Follow-on
MoU Galdino MoU MoU MoU
R$ 22.00
R$ 12.77
IPO
56.863
Since IPO (06/24/11):
Brazil Pharma: + 48.2%
Raia Drogasil: + 115.3%
Ibovespa: (6.8%)
2012 YTD:
Brazil Pharma: + 46.0%
Raia Drogasil: + 67.3%
Ibovespa: (1.7%)
Acquisitions Corporate Events
Source: Econométrica in 05 September, 2012. 18
Note: “MoU” means Memorandum of Undestanding
20. Sales Profile
Strong historical sales growth and same-store sales(SSS)
Same-store sale1,2
(Total) (Mature stores)
Sales Mix1,2 Average Ticket1,2
(% of Gross Revenue) (R$)
(1) As Juny 30, 2012 20
(2) Proforma information for all platform
21. Financial Highlights
Gross Revenue¹ Gross Profit and Gross Margin1
(R$‘000) (R$’000 % of Gross Revenue)
Adjusted EBITDA and EBITDA Margin1,2 Adjusted Net Profit and Adjusted Net Margin1,3
(R$’000 % of Gross Revenue) (R$’000 % of Gross Revenue)
(1) As of 30 Juny, 2012, proforma for all platform.
(2) Adjusted Ebitda, excludes non-recurring expenses. 21
(3) Adjusted net profit, excludes non-recurring expenses, brand and intangible assets amortization and non-recurring IR and Social contribution effect.
22. Use of Proceeds
Source of Proceeds Use of
(Primary Offering¹) Proceeds
Non current Debt Amortization timetable2 229.4
144.6
R$ Optimization 99.7 91.1
of the capital
238mm structure
48.5
R$
476mm
Constant focus on the reduction of the cash cycle
Working Capital,
R$ M&A and 100 news stores in 2012; (~R$650 thousand for each new store)
190mm Organic Growth Improvement and capacity expansion on the DCs
Invested Capex of R$47,7 million in 2012
IT and systems: first class ERP and managing and integration
R$ Operational system optimization
Efficiency and
48mm Systems
SSC and unification of the call center
(1) Considers net cash of R$69,8 million related to the exercise of the Supplemental Option (Green Shoe) 22
(2) Non current debt amortization of R$613,2 million, as of 30 June, 2012 (2Q12).
24. Remaining Lock-up Period
Operating Partners know their regions and the specific characteristics as product mix, stores location and price
sensitivity
All acquisitions have non-compete clauses after the sale of Operating Partners shares
Lock-up Period
2010 2011 2012 2013 2014 2015 2016
1
Jun/2011 Jun/2014
2
Jun/2011 Jun/2014
1
Fev/2012 Fev/2015
1
Mar/2012 Mar/2015
(1) ) After the 3 years lock-up shareholders have the right to sell all stake 24
(2) Shareholders have the right to sell up to 1/3 of the shares every year after the first anniversary of the IPO
25. Brazil Pharma Consolidation
Since its foundation in 2009, Brazil Pharma has been successfully implementing its growth strategy based in
acquisitions and organic growth
Total number of stores (owned stores + franchises)
998 1017
986
824
Debentures
681 Issuance
Follow on
663 Sant’Ana’s
506 Acquisition Acquisition
498 Big Ben’s
468 Acquisition
465
397 Mais
384 Launching
Econômica' IPO
Acquisition
Guararapes the Multiplus
Grupo Farmácia dos and RNF Fidelity
(RNF) Rede Rosário Pobres´ Merger program
Nordeste de Distrital (GRD) points-of-sale (GRD)
Farmácias´ Acquisiton
Farmais’ Foundation points-of-sale Acquisition
Acquisition Acquisition
Sep May Jun Jul Aug Oct Jan Mar Jun Nov Feb Apr Jun
2009 2010 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012
25
